TAX ALLOCATION AGREEMENT
is entered into as March 1, 2006, by and between Ener1 Group, Inc.,
a Florida corporation (“E1G”) and Ener1, Inc. and its
subsidiaries (“Ener1”), a Florida
WHEREAS, E1G is
the common parent corporation of an affiliated group of
corporations (the “E1G Affiliated Group”) within the
meaning of section 1504(a) of the Internal Revenue Code of 1986, as
amended (the “Code”), and Ener1 is a corporation more
than 80% owned by E1G and therefore a member of the E1G Affiliated
and Ener1 deem it appropriate to define the method by which the
federal income tax, including for all purposes of this Agreement,
the alternative minimum tax, and certain state and local tax
liabilities of the E1G Affiliated Group shall be allocated between
the parties and the manner in which such allocated liability shall
in consideration of the premises and of the mutual premises and
covenants hereinafter set forth, the parties hereto agree as
following terms as used in this Agreement shall have the meanings
set forth below:
shall mean the amount determined under Section 3 hereof.
shall mean a consolidated federal income tax return filed pursuant
to section 1501 of the Code.
Liability” shall mean the consolidated federal income tax
liability, including for all purposes of this Agreement,
alternative minimum tax liability, of the E1G Affiliated Group for
any taxable year for which the E1G Affiliated Group files a
“IRS” shall mean the
Internal Revenue Service.
“Member” shall mean
each includible member of the E1G Affiliated Group.
“E1G Affiliated Group”
shall mean the affiliated group of corporations within the meaning
of section 1504(a) of the Code of which E1G is the common
mean the Treasury regulations as in effect from time to
“Separate Return Tax
Liability” shall mean the federal income tax liability,
including for all purposes of this Agreement, alternative minimum
tax liability, of a Member computed as if it had filed a separate
federal income tax return for the applicable taxable year with the
modifications set forth in section 1.1552-1(a)(2)(ii) of the
Liability” shall mean the amount owed by a Member under
Section 2(a) hereof.
Receivable” shall mean the amount owned to a Member pursuant
to Section 2(a) hereof.
Separate Tax Liability.
If a Consolidated Return is filed
by the E1G Affiliated Group for any taxable year, the Separate Tax
Liability of each Member for such taxable year shall, if a positive
number, be the sum of (i) the amount determined for such Member
pursuant to paragraph (b) hereof, plus or minus, as the case may
be, (ii) any increase or reduction in the Member's tentative
Separate Tax Liability required by paragraph (c) hereof. To the
extent an allocation to a Member under clause (ii) of paragraph (c)
hereof reduces a Member's tentative Separate Tax Liability to an
amount less than zero, such negative amount shall be referred to
herein as a “Tax Sharing Receivable.”
Each Member's tentative Separate
Tax Liability shall be an amount equal to that portion of the
Consolidated Tax Liability for such taxable year that the Member's
Separate Return Tax Liability for such taxable year bears to the
sum of the Separate Return Tax Liabilities of all Members for such
taxable year; provided, however, that such amount shall not exceed
the Consolidated Tax Liability for such taxable year.
Adjustments for Additional Amount.